Small and medium enterprises form the backbone of Indian economy. They contribute almost 24.63% to the service sector GDP and comprise 45% of the total manufacturing output of the country. SMEs all over India have witnessed an average of 10% growth rate in the past few decades. The increasing demand for quality local products and services has created a better market for such businesses to tap into.
However, unfortunately, small and medium organisations often lack sufficient capital to increase their production rate and quality. It is especially evident in rural parts of India and amongst the backwards classes where the availability of hard cash or asset to pledge for a loan is absent.
To aid in such a situation, the Government of India has initiated the Stand-Up India Scheme, a project aimed at the backward classes of the country to help them launch or grow their businesses.
What is this Stand-Up India programme?
Stand-Up India Scheme is a financial project launched in April 2016 and tailor-made for the less-privileged people of the country. It shares somewhat similarity with the Startup India project as both provide monetary benefits to first-time entrepreneurs. However, Stand-Up India offers financial assistance to a specific group from society instead of any applicant.
It offers financial assistance to Scheduled Caste, Scheduled Tribe, and women borrowers in the manufacturing, service or trading sector. These funds can be utilised to overcome the various challenges that small business owners face and prepare an enterprise for its growth phase.
Stand-Up India Scheme is also available for partnership firms; however, for this case, 51% of that business’ shareholding and controlling stake should be owned by an SC, ST or woman businessperson.
What are the benefits of this project?
Stand-Up India Scheme offers an excellent opportunity to new business owners with the much-needed financial security. It provides a large sum of up to Rs. 10 Lakh to Rs. 100 Lakh as a composite loan (an amalgamation of term loan and working capital). The loan amount is calculated to cover 75% of the total cost of a project.
This scheme offers the lowest applicable rate of interest available in the market. It is calculated as base rate + 3% + tenor premium. The principal amount is repayable within 7 years, and a beneficiary can enjoy a maximum moratorium period of 18 months.
A borrower has to contribute at least 10% of a project’s cost on his or her own. The Stand-Up India Scheme also provides 25% margin money in conjunction with other central or state funding schemes. Due to the amount of money disbursed, it can help avoid burnout while running your business and pave a foundation for its growth.
The financial institution offering this credit decides the mode of collateral. The amount can also be guaranteed against Credit Guarantee Fund Scheme for Stand-Up India Loans.
The eligibility criteria of Stand-Up India primarily focus on financial inclusion. This program is meant for the backward communities and women, who have generally avoided entrepreneurship in India.
To apply for Standup India Scheme, one has to meet the following requirements –
- An applicant has to be a member of the Scheduled Caste or Scheduled Tribe category or a woman of above 18 years. For a partnership firm, a member from the backwards community or a women entrepreneur should hold a 51% stake in that business.
- The funding is available for first-time ventures into the manufacturing sector, service sector or trading sector.
- An applicant should not have defaults from any previous credit.
How to apply for a loan under the Stand-Up India scheme?
An applicant can use both online and offline facilities to apply for Standup India Scheme. It has a dedicated online portal to receive applications via the internet. Also, one can go directly to the branch of a government-backed financial institution or through the Lead District Manager and apply to receive the benefits of this scheme.
Stand-Up India is a great initiative to help promising entrepreneurs gather the funds required to start a business. Once the organisation is established, one can avail a business loan to avoid financial deficits and burnouts further.
Stand-Up India promises a secure, government-backed way of financing to small and medium scale enterprises. It offers an affordable method of funding for the new ventures and start-ups all across the country.